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The Influence of Foreign Direct Investments on Regional Development in Croatia

Author

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  • Ines Kersan-Skabic

    (Full Professor at the Juraj Dobrila University of Pula, Faculty of Economics and Tourism “Dr. Mijo Mirkovic”, Croatia)

  • Lela Tijanic

    (Postdoctoral researcher at the Juraj Dobrila University of Pula, Faculty of Economics and Tourism “Dr. Mijo Mirkovic”, Croatia)

Abstract

The aim of this study was to determine the influence of foreign direct investments (FDI) on regional development in Croatia and to contribute to previous studies that deal with regional FDI re-allocations. Our analysis was conducted at the NUTS 3 level (21 Croatian counties) and applied panel data analysis to determine the influence of FDI as well as other factors that proved to be significant in regional development in Croatia. The results point out that investment (i.e., both domestic and foreign direct investments), labor productivity, and export have a positive and significant influence on regional development, while absorptive capacity has a negative influence. It is therefore important to strengthen the absorptive capacity of Croatian regions to create a favorable investment environment and to provide good preconditions for the development of other factors of regional development. Findings are relevant for policy makers who should take more proactive roles in attracting FDI as a way of strengthening regional development in Croatia. This may help policy-makers to act locally to achieve cohesion, but it can also be important for foreign investors that observe regional FDI determinants in the European Union.

Suggested Citation

  • Ines Kersan-Skabic & Lela Tijanic, 2014. "The Influence of Foreign Direct Investments on Regional Development in Croatia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 16(2), pages 59-90, December.
    • Handle: RePEc:iez:survey:ces-v16_12-2014_kersan-skabic-tijanic
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; regional development; absorptive capacity;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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